A simple analysis and personal opinion on Maogeping

#MGP (01318.HK) suddenly became a hot topic for Hong Kong IPO. I also participated in the subscription and finally got 5,400 shares. I would like to briefly analyze the overall situation of MGP for everyone. First, I won't go into much detail about the fundamentals, as there are already many articles by experts online that you can refer to. I will mainly list the key points for your reference and make it easier to understand. Highlights: 1. MGP is a cosmetics brand company and currently the only Chinese brand in the top ten domestic rankings. It is also the first domestic brand to be listed on the Hong Kong stock market. This alone makes it a hot topic. 2. The company is still in a phase of rapid growth, with compound growth rates of revenue and net profit from 2021 to 2023 reaching 35% and 42%, respectively. In 2024, the net profit even increased by 47% year-on-year! Of course, there might be some window dressing before the IPO, but regardless, such growth rates should not warrant a low valuation. 3. Extremely high gross and net profit margins. The gross margin is as high as 85%, and the net profit margin is around 23%, which are truly luxury brand-level figures. 4. In terms of valuation, the highest pricing is set at HKD 29.8, with a P/E ratio of about 15-16x. Compared to #Giant Biogene (02367.HK) and #Shanghai Jahwa (600315.SH), this valuation is relatively cheap. 5. After listing, the company's market cap will exceed HKD 7 billion. Barring any surprises, it will be included in the Hong Kong Stock Connect by March next year. Due to its uniqueness and high growth, many domestic funds are expected to buy and hold the stock, providing support for the share price. 6. The IPO subscription was oversubscribed, and the atmosphere was enthusiastic. Theoretically, the stock should open higher, but since brokers offered high leverage (even up to 200x), the reference value is limited. Risks: 1. Based on the allocation results, retail investors who subscribed for one lot got 100% allocation. However, the more lots subscribed, the lower the allocation ratio. Too much retail participation, especially one-lot investors, will increase short-term supply, which is unfavorable for short-term share price performance. 2. The company's stock is too personalized. The company name is the founder's name, which poses high risks. If any moral issues arise with the founder, the brand image could be severely damaged, possibly even destroyed. Therefore, this stock carries high risks, and I won't hold it long-term—only for speculative purposes. 3. The overall investment sentiment in the Hong Kong stock market is currently weak, making it difficult for this stock to see significant hype. Conclusion: Before the allocation results were announced, I was confident that the stock would rise on its debut. However, since the allocation heavily favored retail investors (especially one-lot investors), the upside on the first day may be limited. That said, considering the company's reasonable valuation, high growth, status as the first cosmetics stock listed in Hong Kong, and limited allocation to big players, I still believe the probability of an upward movement is high. Based on valuation, assuming market sentiment remains unchanged, the grey market price could rise by 10-30%. Even if the grey market price doesn't rise or even falls, the company's valuation is not high to begin with. As long as the second-half performance meets expectations and growth is maintained, the stock will likely be included in the Hong Kong Stock Connect next year, leaving little room for a major decline. This short article was written at a Japanese airport, so please correct me if there are any data errors and forgive any mistakes.

$MAO GEPING(01318.HK)